Catalog Budgeting for Web Sales and Traffic, Part 1 of 3

Catalogers struggle with budgeting for Web marketing. How much should they spend? And how much should they reasonably expect to get back in sales? These straightforward questions can prove difficult to answer for the Web side of a catalog business.

This week in the first part of a three-part series examining how catalogers have had to adjust their marketing budgets to account for the influx of Web traffic and buyers, I look at how catalogers can approach the arduous task of planning their Web marketing budgets.

One approach to planning your Web sales and marketing spend is to begin with the three basic areas of Web marketing:

* budget for managing the web site;

* budget for search engine optimization (SEO); and

* budget for e-mail marketing.

These are the big three for most catalogers. The cost to manage the Web site is pretty well understood; it’s typically last year’s cost for all aspects of managing the site plus any new initiatives planned for the upcoming year. The hard part of budgeting for your Web site is allocating the appropriate amount of revenue that comes from your site.

For both SEO and e-mail marketing, catalogers can budget both the costs and sales figures more confidently.

After you’ve budgeted for the big three components, the next step is to plan for “the best of the rest.” What other programs are ongoing? Are you a member of affiliate programs? Do you work with the price comparison engines? What other programs are currently in place from your e-commerce playbook?

Define what each of these existing programs costs and how much revenue it’s delivering. Take a zero-based budgeting approach and make sure that your existing e-commerce programs make sense in terms of sales, costs and profitability. Treat your e-commerce programs like you would traditional catalog prospecting, and fund any programs that deliver new customers at a profit. If the programs aren’t profitable or you’re unable to determine if they are, ask yourself if you should be investing in Web programs that aren’t proving profitable?

Your plans for your ongoing Web marketing programs should include sales, costs and profitability for each program. Then estimate the number of new Web buyers you plan on getting from each program. Make sure that you’re spending your management time and head count wisely. Balance the time and effort for each Web initiative against its proven or potential impact on your business.

There’s a fantastic marketplace of products and ideas with countless opportunities to extend your marketing into the ever-expanding world of the Internet. Catalogers should begin planning their Web budgets with a laundry list of programs. Then boil that list down to a plan for new initiatives for the coming year.

In part two of this three-part series, I’ll provide a list of what these Web programs are that catalogers should consider investing in.

Jim Coogan is president of Catalog Marketing Economics, a Santa Fe, N.M.-based consulting firm focused on catalog circulation planning. You can reach him at (505) 986-9902 or jcoogan@earthlink.net.